Rayovac 2005 Annual Report Download - page 96

departmental costs of full-time incremental integra-
tion employees, and any other items related to the
exit or integration activities. Costs for such activities
are estimated by management after evaluating
detailed analyses of the cost to be incurred. See
Note 15, Restructuring and Related Charges, for a
more complete discussion of recent restructuring
initiatives and related costs.
(y) Adoption of New Accounting Pronouncements
In June 2005, the Financial Accounting Standards
Board (“FASB”) issued a FASB Staff Position (“FSP”)
on SFAS 143, “Accounting for Electronic Equipment
Waste Obligations,” (“FSP FAS 143-1”) which provides
guidance on the accounting for certain obligations
associated with the Directive on Waste Electrical
and Electronic Equipment (the “WEEE”), which was
adopted by the European Union (“EU”). Under the
Directive, the waste management obligation for his-
torical equipment (products put on the market on or
prior to August 13, 2005) remains with a commer-
cial user until the equipment is replaced. FSP FAS
143-1 is required to be applied to the later of the
fi rst reporting period ending after June 8, 2005 or
the date of WEEE’s adoption into law by the applica-
ble EU member countries in which the Company has
signifi cant operations. The Company is currently
evaluating the effect that the adoption of FSP FAS
143-1 will have on its consolidated results of opera-
tions, fi nancial condition and cash fl ow. Such effects
will depend on the respective laws adopted by the
EU member countries.
In December 2004, the FASB issued SFAS 123
(Revised 2004), “Share-Based Payment” (“SFAS
123(R)”) SFAS 123(R) provides investors and other
users of fi nancial statements with more complete
and neutral fi nancial information by requiring that
the compensation cost relating to share-based pay-
ment transactions be recognized in fi nancial state-
ments. That cost will be measured based on the fair
value of the equity or liability instruments issued.
SFAS 123(R) covers a wide range of share-based
compensation arrangements including share
options, restricted share plans, performance-based
awards, share appreciation rights, and employee
share purchase plans. SFAS 123(R) replaces SFAS
123, and supersedes APB 25, “Accounting for Stock
Issued to Employees” (“APB 25”). SFAS 123, as
originally issued in 1995, established as preferable
a fair-value-based method of accounting for share-
based payment transactions with employees. How-
ever, that statement permitted entities the option of
continuing to apply the guidance in APB 25, as long
as the footnotes to fi nancial statements disclosed
what net income would have been had the prefera-
ble fair-value-based method been used. The Company
is required to apply SFAS 123(R) in fi scal year end
2006, which is the fi rst fi scal year that begins after
June 15, 2005. The adoption of SFAS 123(R) is not
expected to have a material impact on the fi nancial
condition, results of operations, or cash fl ow of
the Company.
In May 2005, the FASB issued SFAS No. 154,
“Accounting Changes and Error Corrections”
(“SFAS 154”). SFAS 154 replaces APB Opinion
No. 20, “Accounting Changes,” (“APB 20”) and SFAS
No. 3, “Reporting Accounting Changes in Interim
Financial Statements.” The statement requires a vol-
untary change in accounting principle to be applied
retroactively to all prior period fi nancial statements
so that those fi nancial statements are presented as
if the current accounting principle had always been
applied. APB 20 previously required most voluntary
changes in accounting principle to be recognized by
including in net income of the period of change the
cumulative effect of changing to the new account-
ing principle. In addition, SFAS 154 carries forward
without change the guidance contained in APB 20
for reporting a correction of an error in previously
issued fi nancial statements and a change in
accounting estimate. SFAS 154 is effective for
accounting changes and correction of errors made
after January 1, 2006, with early adoption permit-
ted. SFAS 154 is not expected to have a material
impact on the fi nancial condition, results of opera-
tions, or cash fl ow of the Company.
In March 2005, the FASB issued FASB Interpreta-
tion No. 47, “Accounting for Conditional Asset Retire-
ment Obligations” (“FIN 47”). FIN 47 clarifi es that a
conditional asset retirement obligation, as used in
SFAS 143, “Accounting for Asset Retirement Obliga-
tions,” refers to a legal obligation to perform an
asset retirement activity in which the timing and/or
method of the settlement are conditional on a future
event that may or may not be within the control of
the entity. Accordingly, an entity is required to recog-
nize a liability for the fair value of a conditional asset
retirement obligation if the fair value can be reason-
ably estimated. FIN 47 is effective no later than fi s-
cal years ending after December 15, 2005, with
early adoption allowed. FIN 47 is not expected to
have a material impact on the fi nancial condition,
results of operations, or cash fl ow of the Company.
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
SPECTRUM BRANDS, INC.76